REG - Virgin Wines UK PLC - Trading Update

Virgin Wines UKAnnouncement

22/01/2024 07:00

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RNS Number : 3621A  Virgin Wines UK PLC  22 January 2024

22 January 2024

Virgin Wines UK plc

("Virgin Wines", the "Company" or the "Group")

 

Trading Update

 

Good Christmas period provides strong momentum; maintain FY24 expectations

 

Virgin Wines UK plc (AIM: VINO), one of the UK's largest direct-to-consumer
online wine retailers, is pleased to announce a trading update for the six
months ended 29 December 2023 (the "Period"), with a positive performance that
saw year-on-year revenue growth, a significant increase in profitability,
strong cash generation and excellent efficiencies in its operational
performance.

 

Total revenue in H1 2024 was £34.3m (H1 2023: £33.6m), representing 2% YOY
growth, with sales to repeat customers up c.5% and commercial revenue up 6.5%.
This was achieved despite a subdued consumer economic landscape. In this
environment, the business continued to take a disciplined approach to customer
acquisition and focused its resources on acquiring high quality new customers.
This led to a 22% increase in the new customer conversion rate and a decrease
of 14% on the fully costed cost per acquisition.

 

The Group achieved a significant improvement in profitability during the
Period. EBITDA* increased by 122% to £1.75m (H1 2023: £0.8m), representing
an EBITDA margin of 5.0% (H1 2023: 2.3%), driven by revenue growth and
stringent cost management, with operating variable costs falling by 14.5%
year-on-year.

 

Conversion and cancellation rates continued to improve, with the conversion
rate at 50% by the end of December 2023 (2022: 41.1%) and the cancellation
rate at 16.8% (2022: 17.8%) for the flagship WineBank scheme. The new
Warehouse Management System, implemented during the prior year, operated
smoothly and drove a warehouse cost per case reduction of 25% during the
Period.

 

The Group has no net borrowings, maintains a strong balance sheet and
generated a positive cash return across H1 2024. Gross cash (including Wine
Bank Deposits) at the Period end was £17.4m (December 2022: £14.1m and June
2023: £13.5m). Net cash (which excludes Wine Bank Deposits) improved by
£3.4m to £11.0m at the Period end (December 2022: £7.6m and June 2023:
£5.5m).

The Group continues to manage inventory and working capital in line with
business requirements. Inventories at 29 December 2023 were £8.4m, a decline
of £2.6m from £11.0m in December 2022.

 

FY24 outlook

 

The Board remains confident of the Group's prospects in delivering a positive
2024 performance in line with current market expectations. This confidence is
supported by our underlying trading, high-quality product range, operational
efficiency, loyal customer base and proven business model.

 

The Board believes the robust and resilient nature of the business model and
the strong balance sheet leave it well positioned.

 

Furthermore, the strategic initiatives that are being pursued, including the
launch of Warehouse Wines, give further optimism around the Group's growth
prospects and we look forward to providing more detail on the progress of
these in the coming months.

 

Jay Wright, Chief Executive Officer at Virgin Wines, commented:

 

"We are pleased with our performance through the first half of our financial
year, particularly our strong profitability despite the challenging trading
environment, with EBITDA representing over 5% of revenue. Following
operational challenges last year, we made significant improvements in our
warehouse operations, achieving a planned reduction in fulfillment costs,
while maintaining an excellent next day delivery service throughout the busy
peak trading period. We have remained debt free and cash generative, holding
£17.4m of gross cash and £11.0m of net cash whilst reducing our inventory
levels by 24% YOY.

 

Our existing customer base continues to be active and loyal, with revenue from
repeat sales channels up c.5% YOY and the cancellation rate of our key
WineBank subscription base at an 18-month low. Whilst new customer acquisition
remains challenging, we have maintained our disciplined approach, and our new
Warehouse Wines value offering which launched in late October has had an
encouraging initial response. We go into the second half encouraged by our
performance and in line with the key drivers behind our business model, whilst
remaining mindful of the challenging consumer landscape."

 

* EBITDA excludes share-based payments.

 

- Ends -

 

Enquiries:

 

 Virgin Wines UK plc                     Via Hudson Sandler

 Jay Wright, CEO

 Graeme Weir, CFO

 Liberum Capital Limited

 (Nominated Adviser and Sole Broker)

 Edward Thomas

 Dru Danford

 John Fishley

 Hudson Sandler

 (Public Relations)

 Alex Brennan

 Dan de Belder

 Charlotte Cobb

 Harry Griffiths

                                         Tel: +44 20 3100 2222

                                         virginwines@hudsonsandler.com (mailto:virginwines@hudsonsandler.com)

                                         Tel: +44 20 7796 4133

 

Notes to editors:

About Virgin Wines

Virgin Wines is one of the UK's largest direct-to-consumer online wine
retailers. It is an award-winning business which has a reputation for
supplying and curating high quality products, excellent levels of customer
service and innovative ways of retailing.

 

The Company, which is headquartered in Norwich, UK, was established in 2000 by
the Virgin Group and was subsequently acquired by Direct Wines in 2005 before
being bought out by the Virgin Wines management team, led by CEO Jay Wright
and CFO Graeme Weir, in 2013. It listed on the London Stock Exchange's
Alternative Investment Market (AIM) in 2021.

 

Virgin Wines has almost 700 wines and c. 150 spirits in its portfolio which it
sells to an active customer base of more than 170,000 members. It has
approximately 200 employees and more than 40 trusted winemaking partners and
suppliers around the world.

The Company drives the majority of its revenue though its fast-growing
WineBank subscription scheme, using a variety of marketing channels, as well
as through its Wine Advisor team, Wine Plan channel and Pay As You Go service.

Along with its extensive range of award-winning products, Virgin Wines was
delighted to be named Online Drinks Retailer of the Year for 2022 at last
year's Drinks Retailing Awards, as well as receiving the bronze award for
Contact Centre of the Year at the 2022 UK National Contact Centre Awards. In
addition, in 2023 the Group's Head of Buying, Sophie Lord, was also named
Buyer of the Year by Decanter magazine.

https://www.virginwinesplc.co.uk/ (https://www.virginwinesplc.co.uk/)

 

 

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